BAGHDAD, Iraq (CNN) -- Iraqi forces fighting oil theft have been working to recruit young men from tribes that long have been aiding the smugglers, the country's oil minister told CNN.

Flames rise from a petroleum well near the Iraqi city of Kirkuk.

"This is what we are going to do in any area where we are going to develop an oil or gas field or lay a new pipeline or carry out any new activity," Hussein al-Shahristani told CNN on Monday. "We are going to recruit people from the very community."

Oil is Iraq's key industry. The country's budget for 2008 is $48 billion, al-Shahristani said, and a conservative accounting of revenue from the oil sector is about $39 billion to $40 billion.

Al-Shahristani said Iraq's current oil production is about 2.5 million barrels per day and current export level is about 2 million barrels per day. He said monthly revenue from oil sales is about $5 billion.

He likened the people in Iraq's oil region who work with oil smugglers to farmers in Afghanistan who grow and sell poppies to insurgents for drug production: They are poor and they need to earn a living.

Al-Shahristani said Iraq plans to change the hearts and minds of people who have been helping smugglers and pipeline saboteurs, particularly in southeastern Iraq, where most of the country's lucrative oil industry is based.

The tribes along the pipelines have been aware of and have helped facilitate smuggling activities, he said. But that will change as Iraq aggressively recruits locals to join the oil protection forces and builds schools and hospitals for poor communities in oil-producing areas.

The tactic is reminiscent of the U.S. military's efforts to recruit former Sunni insurgents to join the "awakening," or Sons of Iraq militia groups.

Al-Shahristani said improvements in oil-metering systems have helped authorities account for exports and production and determine how much or from where oil has been smuggled.

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Improvements in aerial surveillance will help deter smugglers, he said, and targeting boats and trucks used by such thieves would "be the best message to the smugglers that they cannot do it anymore."

Much of the oil-producing region in Iraq is near Iran.

Al-Shahristani said Iraq is attempting to work with Iran to stop not only oil smuggling into Iran but also opium smuggling from Iran into Iraq.

"Both sides realized the dangers in allowing these smugglers to use the borders so freely and we always agree that we have to work together to stop this," he said.

Iran denies U.S. accusations of another type of smuggling -- that military elements in Iran are sneaking weapons to insurgents in Iraq.

But Iran joins Iraq in considering oil and narcotics smuggling "extremely dangerous," Al-Shahristani said. And, he said, authorities talked to Iranian President Mahmoud Ahmadinejad about these concerns during his visit this week to Iraq.

He said Iraq's oil revenues will help fund reconstruction and infrastructure improvements. He noted that the corruption he described as rife during Saddam Hussein's regime and the subsequent Coalition Provisional Authority years has "decreased significantly," at least as far as oil is concerned.

Al-Shahristani has high hopes for the country's oil industry. He said the country is working with international oil companies to increase production by 500,000 barrels a day by year's end.

"We will be working with them for further development of our producing fields with the aim of adding of another a million and half," he said.

And he foresees production of 6 million barrels a day in five to 10 years, depending on the security situation.E-mail to a friend